Stelmar Shipping Ltd. announced it has signed a new contract with Daewoo Shipbuilding and Marine Engineering Company Ltd.
of South Korea to purchase a series of five Panamax newbuildings. These five tankers are sister ships to Stelmar's three Panamax tankers already delivered in 2002 and the three to be delivered during second quarter of 2002. Peter Goodfellow
, Chief Executive Officer and President commented, "This newbuilding program for five additional Panamax tankers will make Stelmar the largest owner of modern Panamax tankers. The Company is positioned to benefit from attractive long-term fundamentals of the Panamax market, with almost 50 percent of the world Panamax fleet being over 20 years old and expected to be phased out. We have structured the agreement to purchase the five new Panamax tankers in a manner that preserves Stelmar's core financial strength and positions the Company for future growth in 2004 and 2005."
The first vessel in the series of five is expected to be delivered during the fourth quarter of 2003, with the remaining four vessels to be delivered during 2004. The cost of the five Panamax tankers, including specification enhancements, is approximately $150 million. Upon completion of this future newbuilding program and the delivery of the last Panamax newbuilding in June of 2002, and assuming no other changes, Stelmar Shipping's fleet will consist of 36 tankers of which 19 are Handymax tankers, 13 are Panamax tankers and four are Aframax tankers.
Stelmar will fund the program in a series of five installments in stages until after receiving final delivery. In May 2002, the Company will make the initial payment of $15 million, representing 10% of the total cost. During 2003 and 2004, the Company will make payments of approximately $40 million and $95 million respectively. The company will fund these payments by utilizing pre- and post-delivery financing covering up to 65% of the cost and expects to fund the balance through internally generated cash flow. The equity portions of these installments during 2002, 2003 and 2004 are estimated to be $5 million, $14 million and $34 million respectively.
Goodfellow continued, "Since 2001, Stelmar has had a successful Panamax newbuilding program aimed at creating a strong presence in a 'niche market' that has an over-age and under-built fleet, and at taking advantage of the increasing oil trade from South America to the U.S. To date, we have received delivery of three of the six Panamax tankers expected in the first half of 2002 and have increased our earnings visibility by signing all these Panamaxes on contracts ranging from two to five years at an average rate of approximately $18,200 per day."